CBM’s Retail Shopping Center Management & Leasing Blog

Retail Real Estate News & Trends in Southern California

It’s no secret to anyone in the commercial real estate industry that retail leasing transaction volume has slowed.

Commercial real estate reached the height of its resurgence, amid the full bloom or our “economic recovery,” roughly 18 months ago.

In the ensuing months, however, deal velocity has slowed, and fewer leases are getting done. This isn’t to say the market has ground to a halt or is anywhere near careening off a cliff. If anything, the recent down-turn is normalization. The huge upswing in leasing transactions over the past three years was unsustainable. And the recent shift is not unlike a correction in an inflated and over-valued stock market.

Key Factors Contributing to the Current Retail Leasing Decline

While “corrections” are inevitable in any market, there are three specific factors underling this latest falloff.

The Economy is BOOMING!

First and foremost, the economy is exceptionally strong. Commercial enterprises of all stripes are prospering in a financially stable environment that shows no signs of erasure. And this is particularly true among small businesses, which comprise a dominant chunk of retail strip center tenants.

Meanwhile, much of retail leasing volume hinges on turnover. In many cases… A new tenant goes in, and either their business fails before the term of the lease is up and they vacate. Or, they hang on until the end of their lease but chose not to renew because their business is ultimately unprofitable.

And this fairly consistent turnover creates a stead volume of vacancy, which in turn leads to new deals.

But given the economy’s remarkable strength currently, few strip center businesses are failing. In fact, a great many small businesses are more profitable than ever!

Inventory is Exceptionally Low

Secondly, much of the vacancy that blighted retail shopping centers in the depths of the “great recession” has been reabsorbed. This is particularly true of top-tier, A and B quality spaces (which command the steepest rents).

In essence, the aforementioned thriving economy has driven vacancies down to extraordinarily low rates. And as a result, there is simply very little desirable inventory available at the moment.

Many Landlords Are Harboring Unrealistic Rental Rate Expectations

The third factor, however, is actually the biggest culprit behind the slowing deal volume in the retail strip center segment.

And that factor is? Unrealistic expectations among strip center landlords on the rental rates their remaining vacancies are able to command.

As already noted, the vast majority of A and B quality space has been snapped up. These are your Main + Main locations, end-caps, high street visibility units, and the other highly desirable spaces.

So, what’s remaining? These are your C, D and E quality spaces. Centers a bit off the beaten path, elbow units, obstructed in-line spaces, and other less than desirable sites.

Ultimately, however, these spaces can, and should, lease as well. As the only saying goes… “Everyone (in this case, every tenant) has their price.” But the cold, hard reality is C, D and E quality spaces command lower rents. And the “price” these types of units should be offered at is markedly lower than A and B quality spaces.

Low inventory, however, has sent retail rents skyrocketing. And many strip center landlords have either been spoiled by the high dollar deals they’ve secured on A and B quality space or are pining for deals they’ve heard of other owners transacting on similar space.

Meanwhile, these landlords are being completely unrealistic about the quality of their remaining C, D and E vacancies. In short, they’re looking for A and B quality rental rates on C, D and E quality space.

The Solution?

It’s high time to gain some perspective on the quality of your product. C, D and E quality spaces are inherently flawed. Poor location, low visibility, obscure size, etc… make these units distinctly less desirable.

And less-than-desirable spaces do not command top dollar rents. It’s simply a fact. Thus, it’s time to stop comparing your C, D and E quality spaces to A and B space, be realistic about the value of

these units, and ask for reasonable rents.

Need Help Leasing A Long-Lingering Vacancy in Your Shopping Center?

Are you one of the landlord’s struggling to fill a difficult to lease space? CBM’s industry-leading leasing team is here to help! Our crew has leased PLENTY of seemingly UNLEASABLE space in our 30+ year tenure in SoCal retail real estate. And our agents know exactly what it takes to lease your vacancy.

For additional information about our leasing services or to hire a CBM leasing agent to lease your shopping center, please visit our Services page: cbm1.com/services

20050 Vanowen Street, Winnetka, CA

Centers Business Management (CBM) leasing agents, Brett Mero + David Guardado, recently completed a lease transaction representing the landlord and tenant, a local barbershop, on a 1,300 SQFT retail space. The unit is in a corner strip center at the intersection of Vanowen Street and Winnetka Avenue in prime Winnetka. Situated amid a bustling retail district, the intersection’s additional corners feature Winnetka Bowl bowling alley, a 76 Gas station, and Arco Gas station.

21414 Nordhoff Street, Canoga Park, CA

Centers Business Management (CBM) leasing agent, Brett Mero, recently completed a lease transaction representing the landlord and tenant, a local seafood restaurant, on a 1,000 SQFT retail space. The unit is in a retail strip center at the intersection of Nordhoff Street and Canoga Avenue in prime Canoga Park. Metrorail administrative offices surround the property on the busy intersection’s additional corners.

12737 Glenoaks Boulevard, Sylmar, CA

Centers Business Management (CBM) leasing agent, David Levcovitch, recently completed a leasing transaction presenting the landlord and tenant, Spectrum Cable, on a 1,700 SQFT retail space. The property is in a corner strip center at the intersection of Glenoaks and Sayer in prime Sylmar. Surrounded by a dense residential neighborhood, the center features a diverse tenant mix, including Pizza Hut, Fast Auto Loan, and more.

16227 Devonshire Street, Granada Hills, CA

Centers Business Management (CBM) leasing agent, David Levcovitch, recently completed a lease transaction representing the landlord and tenant, Merry Maids, on a 1,200 SQFT retail space. The unit is in a mid-block strip center on Devonshire Street, just west of Woodley Avenue in prime Granada Hills. Situated directly across from a Smart + Final anchored shopping center, the site features a diverse tenant mix, including Domino’s Pizza, drugstore, beauty salon, tobacco shop, and more.

Los Angeles, CA – November 2018, Centers Business Management (CBM) completes a new leasing transaction with a community health care clinic west of Downtown Los Angeles.

CBM leasing agent, Matt Saker recently completed a lease transaction, representing the landlord in a deal with UniCare (community healthcare services provider) on 9,300 SQFT unit in a newly redeveloped shopping center. The property is situated on heavily-trafficked Alvarado Street, just off the intersection of Alvarado and 7th street. Located immediately south of MacArthur Park and less than a block from the Alvarado Metrorail Purple Line station, the center is ensconed in one of Los Angeles’ most densely populated neighborhoods.

UniCare is a Southern California-based community healthcare services provider. The organization was initially founded in 2013 to address healthcare needs for financially challenged families in Eastern Los Angeles County and Western San Bernardino County. UniCare offers a full range of internal medicine, behavioral management, optometry, and dental care to low-income individuals and families. Since the organization’s initial launch some five years past, UniCare has open six locations (including the Alvarado site) and is currently evaluating plans for additional expansion in greater Los Angeles and the Inland Empire.

This deal presented a “unique dilemma” for leasing agent, Matt Saker. The circumstances forced him to balance the “reality of area demographics” with the landlord’s “grand” financial expectation. “The residential population surrounding the center is EXTREMELY dense,” Saker notes in reference to the 140,000+ inhabitants residing within a 1-mile radius of the property. “But the average household income is under $45,000 annually,” Saker adds, further elaborating: “As such, the type of businesses that typically succeed in this locale service a lower income populous – donuts shops, mini-markets, discount and dollar stores, etc…”

Yet despite the area’s financially challenging demographics, and the center’s relative lack of parking, the landlord was intent upon achieving what Saker termed an “ambitions” rental rate. “UniCare expressed initial interest, as the demographics are a solid fit for their use-type, but were wary of the substantial asking price,” Saker relates. “But when competing for offers started rolling in [Saker fielded at least two additional offers from reputable tenants], UniCare stepped up and agreed to the landlord’s terms,” Saker reveals, adding: “That said, given the area’s pervasive low-income demographics, the location is PERFECT for UniCare. And the landlord secured a VERY competitive rental rate on a 10-lease term.” In the end, the deal proved a: “Huge win for both parties!” Saker declares.

“From ‘Doc in a Box’ to larger scale community healthcare providers [like UniCare], medical uses continue to make huge inroads in retail,” says Rick Rivera, CBM president. “It’s a clear sign of retail’s evolving landscape, and also illustrates the growing realization that seemingly ‘non-traditional’ tenants represent the highest and best use for many retail properties. Which is definitely the case for this site,” Rivera adds in reference to community healthcare being an ideal match for the surrounding area’s demographic composition.

For more information about CBM and their retail leasing and property management services, please contact: Rick Rivera 310.575.1517 x201 | rickr@cbm1.com.


6522 Laurel Canyon Boulevard, North Hollywood, CA

Centers Business Management (CBM) leasing agent, Jason Ehrenpreis, recently completed a lease transaction representing the landlord and tenant, a local beauty supply retailer, on a 3,004 SQFT retail space. Formerly occupied by Shoe City, the unit shares the street retail building with Rent-A-Center. The property is on busy Laurel Canyon Boulevard, just north of the intersection at Hamlin Street in prime North Hollywood.

624 Mission Street, South Pasadena, CA

Centers Business Management (CBM) leasing agent, Barry Bussiere, recently completed a lease transaction representing the landlord and tenant, Clean Bubbles Laundromat, on a 3,250 SQFT retail space. The unit is in a retail strip center on Mission Street in prime Pasadena. Along with a diverse tenant mix, the site is situated directly across from a well-patronized Trader Joe’s grocery store.

504 S. Knott Avenue, Anaheim, CA

Centers Business Management (CBM) leasing agent, Barry Bussiere, recently completed a leasing transaction, representing the landlord and tenant, a WIC store, on a 2,400 SQFT retail space. The unit is located in a corner strip center at the signalized intersection of Knott and Orange in prime Anaheim. In addition to 7-Eleven, the property features a diverse mix of restaurant and service tenants.

15717 Crenshaw Boulevard, Gardena, CA

Centers Business Management (CBM) leasing agent, Matt Saker, recently completed a lease transaction representing the landlord and tenant, Coco Fresh Juice & Tea, a Taiwan-based boba cafe, on a 1,200 SQFT retail space. The unit is situated in a corner strip center at the heavily-trafficked, signalized intersection of Crenshaw and Manhattan Beach in prime Gardena. Notable co-tenants include CIS Driving School, Metro PCS cell phone sales and service, and famed area eatery, Tilly’s Taco.